Palos Community Hospital v. Humana Insurance Co.

2025 IL App (1st) 231917

• Court: Appellate Court of Illinois
• Decided: June 9, 2025
• Docket: 1-23-1917
• Status: Published

Opinion

2025 IL App (1st) 231917 No. 1-23-1917

FIRST DIVISION June 9, 2025 ____________________________________________________________________________

IN THE APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT ____________________________________________________________________________

PALOS COMMUNITY HOSPITAL, a Not-for- ) Appeal from the Circuit Court of Profit Community Hospital, ) Cook County. ) Plaintiff-Appellant, ) ) v. ) No. 2022 L 2971 ) (renumbered from 2013 L 7185) HUMANA INSURANCE COMPANY, ) ) Defendant-Appellee. ) ) The Honorable ) Jerry A. Esrig, ) Judge Presiding. ____________________________________________________________________________

JUSTICE PUCINSKI delivered the judgment of the court, with opinion. Presiding Justice Fitzgerald Smith and Justice Cobbs concurred in the judgment and opinion.

OPINION

¶1 In this breach of contract action, plaintiff-appellant Palos Community Hospital (Palos)

appeals from the circuit court orders that (1) entered summary judgment in favor of defendant-

appellee Humana Insurance Company (HIC) upon the parties’ cross-motions for summary

judgment and (2) denied Palos’s motion to reconsider. We reverse the grant of summary judgment

and remand for further proceedings, as the record presented genuine issues of material fact.

¶2 BACKGROUND 1-23-1917

¶3 This action arises from Palos’s claim that it was underpaid for several years by HIC, an

affiliate of Humana, Inc. (Humana), when HIC reimbursed the hospital for medical services

provided to patients insured by HIC. Specifically, Palos alleges that HIC underpaid it from 2004

through 2010, by applying lower reimbursement rates under the wrong governing contract. Palos

claims that it was entitled to higher rates of reimbursement under an agreement entered in 2002

between Palos and the ChoiceCare network, a separate entity that is also affiliated with Humana. 1

Palos alleges that HIC’s underpayment violated the terms of a third agreement between

ChoiceCare and HIC, to which Palos was a third-party beneficiary. HIC maintains (and the trial

court agreed) that there was no breach because HIC properly reimbursed Palos at the lower rates

called for by a separate, preexisting direct contract with Palos (the Michael Reese contract) that

HIC became a party to in the 1990s. The heart of the dispute is whether (and if so, when) HIC

became party to the Michael Reese contract.

¶4 Notably, this is the second time this matter has been before this court. After a 2018 jury

trial led to a verdict in favor of HIC, this court affirmed (Palos Community Hospital v. Humana,

Inc., 2020 IL App (1st) 190633), but our supreme court reversed and remanded to the trial court.

Palos Community Hospital v. Humana Insurance Co., 2021 IL 126008 (concluding that the trial

court erred in denying Palos’s motion for substitution of judge). On remand, the parties filed the

cross-motions for summary judgment that are at issue in the instant appeal.

¶5 Palos has been a health care provider since 1973. As such, it contracts with numerous

insurers, such as health maintenance organizations (HMOs) and preferred provider organizations

1 This case requires reference to a number of distinct corporate entities that are all affiliated with the same holding company, Humana. For clarity, this decision will use “Humana” to refer only to the holding company; we will use other terms to refer to the separate affiliated entities. -2- 1-23-1917

(PPOs). 2 Through HMOs and PPOs, insurers offer healthcare providers more patient volume; in

exchange, the providers agree to discounted medical fees.

¶6 The 1990 Michael Reese Contract

¶7 In June 1990, Palos entered into a contract with an HMO then known as Michael Reese

Health Plan, Inc. (Michael Reese). Under that contract (the Michael Reese contract), Michael

Reese agreed to refer certain of its enrollees to Palos and agreed to pay Palos according to a fee

schedule appended to the contract. 3 It is undisputed that, during the 2004 to 2010 period at issue,

Palos’s reimbursement rates under the Michael Reese contract were lower than the reimbursement

rates under the 2002 ChoiceCare agreement.

¶8 Acquisition of Michael Reese and Assignment of the Michael Reese Contract

¶9 In February 1991, Michael Reese was acquired by Humana Health Plan, Inc. (HHP). HHP

is an HMO. HHP is a separate corporate entity from HIC, the defendant-appellant herein.

¶ 10 On February 15, 1991, Palos executed a “Consent to Assignment” of “all of the current

duties, rights and interests of Michael Reese Health Plan, Inc.” under the Michael Reese contract

to HHP.

¶ 11 The 1991 Amendment to the Michael Reese Contract

2 HMOs “have their own network of doctors, hospitals and other healthcare providers who have agreed to accept payment at a certain level for any services they provide. This allows the HMO to keep costs in check for its members.” What is an HMO?, Humana (Apr. 29, 2025, 1:30 PM), https://www.humana.com/medicare/medicare-resources/what-is-hmo [https://perma.cc/L9AU-WZHM]. A PPO, as stated in the affidavit of HIC witness John Maxwell, “is an arrangement whereby a healthcare provider *** contracts with third-party payors *** under which the provider discounts its fees in exchange for being part of a network and receiving ‘steerage’ of patients by the payor, usually via financial incentives in the patients’ benefits plans insured or administered by the payor.” 3 The same underlying contract is referred to by various names in the record and the parties’ briefing, including the “1990 Contract”, the “MRHP Contract,” or the “Direct Contract.” For clarity, we refer to it consistently as the Michael Reese contract. -3- 1-23-1917

¶ 12 In July 1991, Palos and HHP executed an amendment to the Michael Reese agreement.

The interpretation of the 1991 amendment is key to this appeal. The amendment stated:

“Palos Community Hospital hereby agrees to provide medical

services as defined in the aforementioned agreement *** to

members enrolled in Humana Health Care Plans Preferred Provider

Organization (‘PPO’). Such medical services will be provided under

the same terms and conditions specified in the hospital agreement

for members of Humana-Michael Reese Health Maintenance

Organization.”

The signature lines to the 1991 amendment indicate it was signed by Sister Margaret Wright on

behalf of Palos, and by Barry Averill on behalf of “Humana Health Plans, Inc.”

¶ 13 There is no dispute that the 1991 amendment did not explicitly name HIC. It is also

undisputed that there was no entity with the name “Humana Health Care Plans Preferred Provider

Organization.” However, HIC maintained that the phrase “Humana Health Care Plans Preferred

Provider Organization” referred to HIC, such that HIC was thereafter entitled to the reimbursement

rates under the Michael Reese contract.

¶ 14 Subsequent Amendments to the Michael Reese Contract Reference HIC

¶ 15 The Michael Reese contract was amended again in amendments that became effective in

January 1996, May 2004, October 2004, May 2005, and October 2008. Each of those amendments

was signed by Palos and by “HUMANA”, which was defined to include several entities.

¶ 16 Notably, the 2005 and 2008 amendments to the Michael Reese contract—executed during

the period in which Palos claims it was underpaid by HIC—specifically referenced HIC as one of

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the bound “HUMANA” entities. That is, the 2005 amendment to the Michael Reese contract

recited:

“The agreement by and between HUMANA Health Plan, INC.,

HUMANA Health Chicago, INC., HUMANA Insurance Company

and HUMANA HealthChicago Insurance Company and their

affiliates, (collectively referred to herein as ‘HUMANA’), and Palos

Community Hospital *** entered into on February 15, 1991 *** is

hereby amended as follows:” (Emphasis added).

The 2005 amendment was signed by Paul Maxwell on behalf of Humana and by Sister Margaret

Wright, Palos’s president.

¶ 17 Similarly, the 2008 amendment to the Michael Reese contract began with the recital that:

and Humana HealthChicago [I]nsurance Company and their

affiliates (collectively referred to herein as ‘HUMANA’), and Palos

Community Hospital *** entered into on February 1, 1991 *** is

hereby amended as follows:” (Emphasis added.)

The 2008 amendment set forth new reimbursement rates for certain hospital services.

¶ 18 The ChoiceCare Network and the HIC-ChoiceCare “Payor Agreement”

¶ 19 A separate Humana entity is Health Value Management, Inc., d/b/a ChoiceCare Network

(“ChoiceCare”). ChoiceCare is not an insurance plan such as an HMO or a PPO; that is,

ChoiceCare does not independently insure anyone. Rather, ChoiceCare administers a network of

providers and negotiates reimbursement on behalf of insurers.

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¶ 20 In June 1999, Humana sent a letter to Palos informing it that as of August 1999, Humana

“will assume the management and operation of its provider network and rename it ChoiceCare.”

¶ 21 In November 2000, ChoiceCare and HIC entered into a “Payor Agreement,” with HIC as

“Payor.” The Payor Agreement recited that ChoiceCare had developed healthcare provider

networks and that HIC desired to contract with ChoiceCare “in order to provide access to health

care services available for [HIC’s] Covered Persons.” The Payor Agreement also recited that

ChoiceCare “has contracted *** with Preferred Providers to provide Covered Services” and “will

enter into Provider Agreements with Preferred Providers.” 4

¶ 22 In paragraph IV.A(1) of the Payor Agreement, HIC agreed to “reimburse Preferred

Providers according to the reimbursement amounts specified in ChoiceCare’s agreements with

Preferred Providers.” However, paragraph IV.E provided that: “Nothing in this paragraph is

intended to supersede Payors’ right to reimburse Preferred Providers in accordance with terms

included in provider agreements directly between Payor and Preferred Providers (if any).”

¶ 23 The HIC-ChoiceCare Payor Agreement stated that “No person or entity other than a

Preferred Provider shall be a third-party beneficiary of this Agreement.” Palos asserts it was a

third-party beneficiary of the Payor Agreement.

¶ 24 Palos Joins the ChoiceCare Network (ChoiceCare Contract)

¶ 25 In April 2002, ChoiceCare sent Palos a letter inviting Palos to become part of the

“ChoiceCare provider network,” stating it was one of the nation’s largest health care networks.

The letter stated “ChoiceCare Network is a part of *** a wholly owned subsidiary of Humana,

Inc.; therefore, the proposed rate structure would be at parity with the rate structure currently in

4 “Preferred Providers” was defined to mean “[t]he hospitals *** and other health care providers with which CHOICECARE has entered into Provider Agreements for the Provision of Covered Services.” There is no dispute that Palos was a “Preferred Provider” within the meaning of the Payor Agreement. -6- 1-23-1917

place for the Humana PPO Product lines.” The letter stated that the ChoiceCare network “gives

Humana true national presence, and in the short time that ChoiceCare has been in existence the

PPO membership has grown to over one million members” in the United States.

¶ 26 In June 2002, Palos and ChoiceCare entered into a “Hospital Participation Agreement”

(hereinafter the ChoiceCare contract) by which Palos joined the ChoiceCare network. The

agreement recited that “ChoiceCare administers the provider network for such other third party

payor(s) (hereinafter referred to as ‘Payor’ or ‘Payors’) issuing and/or administering the Plans.”

¶ 27 In the ChoiceCare contract, Palos agreed to provide services to “Members,” i.e., persons

“covered under designated *** insurance policies, or other third party payors’ health benefits

contracts.” For providing medical services to members, Palos “agree[d] to accept a thirty-five

percent (35%) discount from standard billed charges for inpatient services and a twelve percent

(12%) discount from standard billed charges for outpatient services,” less applicable copays. The

reimbursement rates in the ChoiceCare contract were higher than the rates applicable pursuant to

the Michael Reese contract during the relevant time period.

¶ 28 However, in a provision analogous to paragraph IV.E of the Payor Agreement, section 13.6

of the ChoiceCare contract indicated that it did not supersede any preexisting direct contract

between a payor and Palos:

“Nothing in this Agreement shall limit or prohibit a Payor from

contracting directly with or maintaining a direct agreement with

Hospital and utilizing such direct agreements for payment for

Covered Services to Members. In the event that Payor elects to apply

discounts from their direct agreement with Hospital, the Payor shall

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not apply the discount from this Agreement so long as its direct

agreement with Hospital remains in effect.”

¶ 29 The parties dispute whether HIC, as a payor, had a “direct agreement” with Palos within

the meaning of section 13.6 of the ChoiceCare contract. HIC maintains that the Michael Reese

contract (as amended in 1991 and subsequently) was such a direct contract between HIC and Palos.

Palos maintains that HIC was never a party to the Michael Reese contract, such that Palos was

entitled to the reimbursement rates in the ChoiceCare contract.

¶ 30 Dispute Arises as to Which Contract Governs Palos’s Reimbursement Rates

¶ 31 The record reflects that the reimbursement rates under the Michael Reese contract and the

2002 ChoiceCare contract were identical until 2004, when an amendment to the Michael Reese

contract lowered the reimbursement rates under that contract.

¶ 32 On July 1, 2004, Palos’s chief financial officer, Andrew Stefo, sent a letter to Humana Vice

President Paul Maxwell regarding a “troubling” issue. Stefo stated: “It has come to [Palos’s]

attention that Choice Care is accessing Humana’s PPO discounts.” Stefo asserted that Palos

“operates under a separate agreement with Choice Care (June 25, 2002) which should govern the

payments received for services rendered to its members.” Stefo asked that Humana “ensure that

the Humana and Choice Care contracts are adjudicated according to the terms of these respective

agreements” and to “[c]oordinate the proper, additional reimbursement due to Palos.”

¶ 33 Palos subsequently hired a third party auditor. In 2010, Palos made a formal demand

against HIC seeking payment of $21,964,243. In a March 2010 response, HIC asserted that Palos

was “mistaken” in its belief that it had been underpaid. HIC maintained that the governing contract

was not the ChoiceCare agreement, but rather the Michael Reese contract, “the same contract that

both parties have been operating under since its original effective date of July 1, 1990,” as

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“amended over the years.” Insofar as Palos relied on the ChoiceCare contract, HIC noted that it

“contains a provision [paragraph 13.6] which allows [HIC] to elect to continue under a prior direct

contract.” HIC indicated its position that the governing agreement was the Michael Reese contract,

as amended in 1991 “to include all PPO Members.”

¶ 34 HIC further stated that “by continuing a course of conduct and course of performance of

repeatedly accepting the benefits of steerage *** and payment for claims for services rendered to

Humana Members without dispute, [Palos] has ratified the terms and conditions of the [Michael

Reese] agreement.”

¶ 35 Palos Commences the Lawsuit

¶ 36 In June 2013, Palos filed its original complaint for fraud and breach of contract against

Humana, HIC, and other defendants. Palos filed an amended complaint in December 2014.

¶ 37 In the amended complaint, Palos alleged that Humana (as well as HIC and other Humana

affiliates) failed to honor the ChoiceCare contract by causing Palos to be reimbursed “at rates

materially lower than the agreed-upon 2002 ChoiceCare PPO Rates.” Palos alleged that, for a

number of years, Humana “concealed the reimbursement of health care services at less than the

2002 ChoiceCare PPO Rates *** for thousands of patients who presented health insurance cards

with the ChoiceCare logo” to Palos.

¶ 38 Count IV of the amended complaint is the only surviving count at issue. In that count, Palos

alleged that HIC breached the ChoiceCare-HIC Payor Agreement, to which Palos was a third-party

beneficiary, by failing to properly reimburse Palos. Palos alleged that HIC breached by “paying a

lesser amount during the Relevant Period to Palos Community Hospital as a Preferred Provider

under the Payor Agreement than the 2002 ChoiceCare PPO Rates for services rendered” by Palos.

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Palos alleged that it was damaged because it was “not reimbursed at the 2002 ChoiceCare PPO

Rates.”

¶ 39 Trial, Prior Appeal, and Remand

¶ 40 Lengthy discovery disputes led the original trial judge (Honorable Sanjay Tailor) to appoint

a retired judge as a “discovery master.” In March 2017, the discovery master drafted a

recommendation to the trial court to require Palos to respond to certain discovery requests. Palos

filed a motion to strike in which it disputed the trial court’s authority to appoint a discovery master;

Palos also filed an objection to the discovery master’s recommendation.

¶ 41 Before any ruling on those matters, the case was reassigned to Honorable Diane Shelley

because Judge Tailor moved to the chancery division. After two hearings before Judge Shelley, in

April 2017, Palos moved for substitution of judge as a matter of right, pursuant to section 2-

1001(a)(2) of the Code of Civil Procedure. 735 ILCS 5/2-1001(a)(2) (West 2016). The trial court

denied that motion as untimely, reasoning that Palos had “tested the waters” and formed an opinion

on how the court might rule on discovery matters. See Palos Community Hospital, 2021 IL

126008, ¶ 13.

¶ 42 The parties proceeded with a number of depositions. Paul Maxwell testified as the

corporate representative for the Humana defendants. In his January 2018 deposition, Maxwell

testified that he had worked for Humana from 1991 (the year that it purchased the Michael Reese

Health Plan) until 2006.

¶ 43 Maxwell explained that HIC is an insurance company licensed as a PPO, whereas “Humana

Health Plan, Inc.” is an HMO. Maxwell testified that the Michael Reese contract, as amended in

1991 and subsequently, was a direct contract between HIC and Palos.

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¶ 44 Maxwell did not state that he was personally involved in the negotiation of the 1991

amendment. Nevertheless, he testified to his belief that its phrase “Humana Health Care Plan

Preferred Provider Organization” referred to HIC and that HIC was “the only PPO that [Humana]

had at the time.” He acknowledged the 1991 amendment was signed by Barry Averill on behalf of

“Humana Health Plan, Inc.” However, he believed that Averill had “signature authority” for HIC.

¶ 45 In June 2018, the matter proceeded to a 10-day jury trial, during which numerous witnesses

testified. Palos’s primary witness was David Manchester, who served as Palos’s vice president for

professional services. Manchester joined Palos in 1979 and was involved in the negotiation of

managed care contracts.

¶ 46 Manchester testified he had personal knowledge regarding the circumstances surrounding

the 1990 Michael Reese contract and the 1991 amendment. He explained that the original 1990

Michael Reese contract was an agreement with an HMO and that the Michael Reese HMO was

subsequently acquired by HHP.

¶ 47 As to the origin of 1991 amendment, Manchester testified that it had a relatively limited

purpose:

“Q. Now, going back to the Michael Reese HMO agreement, did

there come a point in time when the hospital was approached to

allow some PPO business into that agreement?

A. Yes. That was, I believe, in 1991, not terribly long after

that. As the Michael Reese Health Plan was continuing to try to grow

its business in the Chicago metropolitan areas, it was our

understanding they had approached the City of Chicago about

enrolling a number of their employees.

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As described to us by the representatives of the Michael Reese

Health Plan, the City of Chicago was very reluctant because they

didn’t think their employees would go for an HMO contract at that

time. *** They didn’t feel that an HMO would have great

marketability among their members, so they asked if they could

qualify this as a *** Preferred Provider Organization or a PPO

product.

So the representatives of Michael Reese came to us and said,

could we piggy back this very specific group into the contract.

Q. And did the hospital ultimately agree?

A. Ultimately we did. It was a little unusual, but we agreed that

it made sense. ***

Q. And did you believe that by consenting to allowing this

particular PPO in, that the hospital was consenting to allowing any

PPO in that Humana may have had?

A. No. They were very specific as to what the—you know, the

brackets were around this group. We were very specific, and, you

know, there was mutual understanding in that regard as to what it

was.”

¶ 48 Thus, Manchester testified to his understanding that the phrase “Humana Health Care Plans

PPO” in the 1991 amendment had a limited meaning:

“Q. Now *** it references the PPO that we’ve been talking

about.

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A. Right. The Humana Health Care Plans PPO.

Q. And is that the specific PPO that the hospital agreed to allow

access to this contract?

A. That’s our understanding. This is the City of Chicago

employees’ group, yes.”

He described the 1991 amendment as “an HMO agreement with sort of an asterisk next to it in

regard for this group.”

¶ 49 Manchester denied any there was any discussion in 1991 that the phrase “Humana Health

Care Plans Preferred Provider Organization” was a trade name used to refer to HIC. He agreed

that there was no mention of HIC in the 1991 amendment to the Michael Reese contract.

Manchester acknowledged there were subsequent amendments to the Michael Reese contract, but

he denied that those amendments added additional parties.

¶ 50 Palos also elicited trial testimony from Stefo. Similar to Manchester’s testimony, Stefo

indicated his belief that the 1991 amendment had a limited purpose to accommodate certain

government employees. He understood that the amendment “allowed a very narrow county and

city employee group to access *** the Michael Reese Health Plan HMO rates under their PPO.”

¶ 51 Maxwell, Humana’s director of provider contracting, also testified at trial. Maxwell

acknowledged he was not involved in the discussions leading to the 1991 amendment. However,

Maxwell testified to his understanding that the 1991 amendment added HIC as a party because “it

added the term ‘PPO,’ which is an insurance company.” He acknowledged the amendment was

signed by “Humana Health Plans,” not HIC. He also agreed there is not an entity named “Humana

Health Care Plans Preferred Provider Organization.”

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¶ 52 Nonetheless, Maxwell maintained that the “PPO” referenced in the 1991 amendment could

only have meant HIC, as HIC “was the only company Humana owned in Illinois at the time that

could have offered a PPO.” Thus, he believed that the amendment made HIC a party to the Michael

Reese contract.

¶ 53 Elsewhere during the trial, HIC elicited testimony about its payment history through Laurie

Poynter, who is HIC’s director of Integrated Network Payment Solutions Team. In that role, she

is responsible for the computer systems that maintain contract pricing and claim reimbursement

data. Referring to an Excel spreadsheet, Poynter testified that from 2000 to 2002, HIC paid over

3000 PPO claims from Palos and that the total amount billed was between $4 million and $5

million.

¶ 54 The jury found HIC not liable on Palos’ breach of contract claim, and the trial court entered

judgment on that verdict.

¶ 55 Palos appealed the judgment, arguing, inter alia, that the trial court erred in denying its

motion for substitution of judge as a matter of right. This court affirmed the judgment of the trial

court. Humana, 2020 IL App (1st) 190633. However, our supreme court reversed, holding that the

trial court erred in denying Palos’s motion to substitute judge. Palos Community Hospital, 2021

IL 126008, ¶¶ 28-29. Our supreme court explained that the substitution motion was timely because

Judge Shelly had not yet ruled on any substantial issue in the case. Id. (holding the “test the waters

doctrine is incompatible with the plain language of section 2-1001(a)(2)”). Our supreme court

remanded the matter to the trial court with directions to vacate all orders entered after the denial

of the substitution motion and to conduct further proceedings. Id. ¶ 37.

¶ 56 Cross-Motions for Summary Judgment on Remand

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¶ 57 On remand, the matter proceeded before Judge Jerry Esrig. In January 2023, HIC and Palos

filed cross-motions for summary judgment, in which they referred to pretrial discovery as well as

evidence from the 2018 jury trial.

¶ 58 In Palos’s motion, it asserted the undisputed facts established that, between 2004 and 2010,

HIC breached the Payor Agreement—to which Palos was a third-party beneficiary—by failing to

reimburse Palos at the rates specified in the 2002 ChoiceCare contract.

¶ 59 Palos acknowledged that the ChoiceCare contract contained a “clause providing that, if

HIC has a direct contract with Palos, it may pay the direct-contract rate instead of the ChoiceCare

rate.” However, Palos asserted that “no such direct contract exists.” Palos acknowledged that HIC

claimed the Michael Reese contract was a direct contract that governed the applicable

reimbursement rates, but Palos argued that HIC never became a party to the Michael Reese

contract. Insofar as HIC relied on the 1991 amendment referring to “Humana Health Care Plans

Preferred Provider Organization,” Palos emphasized that the 1991 amendment never mentioned

HIC and was not signed by HIC. Rather, it “was signed only by Humana Health Plans and Palos.”

Thus, Palos asserted there was no “direct” contract whose rates could govern HIC’s

reimbursements to Palos, other than the ChoiceCare agreement.

¶ 60 Palos further argued that the subsequent amendments to the Michael Reese contract did not

add HIC as a party, notwithstanding that their “prefatory clauses” listed HIC, among other Humana

entities.

¶ 61 Palos additionally argued that because the ChoiceCare contract was an integrated contract,

the “four corners” rule barred HIC from relying on extrinsic evidence to argue that Palos had

accepted “underpayments [from HIC] without complaint.” In any event, Palos cited testimony

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from the 2018 trial that HIC’s “underpayments were not obvious to Palos” and that it was only in

2009 that an audit “discovered the systematic underpayments.”

¶ 62 In HIC’s cross-motion for summary judgment, it contended there was no genuine issue of

fact that HIC was made a party to the Michael Reese contract, which governed the applicable

reimbursement rates it owed to Palos. HIC argued that the Michael Reese contract was a “direct

agreement” of the sort contemplated by section 13.6 of the ChoiceCare contract and paragraph

IV.E. of the Payor Agreement, such that HIC was entitled to pay the lower rates under the Michael

¶ 63 HIC relied on the 1991 amendment referring to “Humana Health Care Plans Preferred

Provider Organization.” HIC urged that although this amendment used a “brand name rather than

its legal name,” the evidence established that HIC was the only entity the 1991 amendment could

possibly have referred to. HIC referred to deposition and trial testimony for the proposition that

the term “Humana Health Care Plans PPO” meant HIC, as HIC was “the one and only Humana

entity that offered a PPO to providers in the Chicago area.”

¶ 64 HIC also claimed that because the 2005 and 2008 amendments did identify HIC, there was

no doubt that HIC was a party to the Michael Reese contract. HIC urged that it was entitled to

judgment because there was “no dispute that Palos was paid in accordance with” the Michael Reese

contract. In support of its motion, HIC offered affidavits from Maxwell and Poynter.

¶ 65 The court heard argument on the cross-motions on April 7, 2023. Palos’s counsel argued

that the motions came down to whether HIC became a party to the Michael Reese contract. Palos

acknowledged that paragraph 13.6 of the ChoiceCare contract would apply if HIC had a “direct

contract with Palos,” but argued that there was no such direct contract. Palos urged that the 1991

amendment did not make HIC party to the Michael Reese contract, emphasizing that it did not

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contain the words “Humana Insurance Company” but referred to “members enrolled in Humana

¶ 66 HIC counsel argued that, since 1991, Palos has been an in-network provider “for the

Humana PPO which for the entire time has been offered exclusively in Illinois by Humana

Insurance Company, or HIC.” HIC noted that both the Payor Agreement and ChoiceCare

agreement provide that “if there’s a direct agreement, that HIC is entitled to pay the rate in that

direct agreement.” HIC argued that the Michael Reese contract was a direct agreement and that

HIC was entitled to pay the rates under that contract.

¶ 67 HIC’s counsel acknowledged that the 1991 amendment “does not expressly refer to” HIC

but urged there was no doubt that “the offeror of the PPO in question” was, in fact, HIC. HIC

urged there was no dispute that HIC was the only Humana entity that offered a PPO in Illinois in

the relevant time period. HIC’s counsel also pointed out that the 2005 and 2008 amendments to

the Michael Reese contract explicitly referred to HIC.

¶ 68 After hearing argument, the court ruled in favor of HIC and against Palos. In doing so, it

agreed that the “central issue is whether HIC was added to the original 1990 [Michael Reese]

contract such as to satisfy the direct contract provision in paragraph 13.6 of the payor agreement.”

The court found that HIC “is a party to the original 1990 contact by virtue of the 1991 amendment.”

¶ 69 The court recognized that the parties disputed the meaning of the term “Humana Health

Care Plans Preferred Provider Organization” within the 1991 amendment. Thus, the court stated

that it “look[ed] to extrinsic evidence” on that issue. The court found that “all” of the extrinsic

evidence “supports HIC’s position that HIC is that entity, including the contemporaneous evidence

that the one and only Humana PPO, the parties’ course of dealings and subsequent amendments

which specifically describe HIC.”

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¶ 70 The court explained its conclusion that the 1991 amendment referred to HIC:

“Neither party claims or *** submits any evidence that Humana

Health Care Plans Preferred Provider Organization was or is a

freestanding entity. In fact, the very words, especially absent a

corporate designation, suggests that it is a trade name. Moreover, the

phrase correctly describes HIC and no other entity. The evidence is

that at the time of the signing of the [1991] amendment, HIC was

the only Humana Health Care Plans Preferred Provider Organization

in Illinois.”

¶ 71 The court also relied on the parties’ “course of conduct” for its conclusion. It remarked that

Palos “offers no evidence to dispute that HIC was, in fact, the only party who paid claims for

Humana PPO patients since 1991 or that Palos accepted HIC’s payments without objection.” It

noted that whether Palos knew the “formal name of the PPO organization at the time of the

amendment is of no legal significance,” as “[t]here was only one entity it could have been.” The

court also noted that HIC was “expressly named in subsequent amendments” to the Michael Reese

contract that Palos signed.

¶ 72 On April 12, 2023, the court entered a corresponding written order denying Palos’s motion

for summary judgment and granting HIC’s motion for summary judgment.

¶ 73 Palos filed a motion for reconsideration. In it, Palos asserted that once the court determined

that there was an ambiguity in the 1991 amendment, it could not grant summary judgment because

the ambiguity presented a question of fact for a jury. It urged that the court had “improperly

decided a disputed fact issue” by evaluating extrinsic evidence after finding an ambiguity.

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¶ 74 Palos otherwise asserted that the extrinsic evidence was not “one-sided,” and that certain

extrinsic evidence—some of which had not relied on in its motion—called into doubt whether HIC

was the party referenced in the 1991 amendment. Among other evidence, Palos cited Manchester’s

2018 trial testimony that the 1991 amendment was precipitated by Michael Reese’s desire to

extend the contract to a relatively limited group of government employees and that there was no

discussion that “Humana Health Care Plans Preferred Provider Organization” was a trade name

for HIC.

¶ 75 Palos separately argued that the 1991 amendment “included no contract-formation terms

providing that a new party [HIC]was being added to the contract.” Palos pointed out that the 1991

amendment was executed by only two entities: Palos and Humana Health Plans (HHP). HIC was

not named in or a party to the amendment. Palos argued that without an expression of the parties’

intent to add a new contracting party, no contract formation could occur.

¶ 76 The motion to reconsider was argued on July 14, 2023. In arguing that the 1991 amendment

was not a “direct contract” between HIC and Palos, Palos argued that since HHP was a separate

entity, it could not “contract for HIC.” Palos argued that the 1991 amendment did not make HIC a

party, because HIC did not sign it.

¶ 77 During the hearing on the motion to reconsider, the court asked HIC’s counsel to address

how HIC could be bound by the 1991 amendment when it was executed by a different entity, HHP.

HIC counsel argued that, even if the 1991 amendment was signed by HHP, the parties’ “subsequent

course of conduct” showed an understanding that HIC was bound. HIC cited the 2005 and 2008

amendments, which explicitly named HIC.

¶ 78 This topic led to the following exchange:

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“THE COURT: *** So we have an amendment that binds Palos

at least to treat HIC patients in a certain way. That agreement is not

signed by HIC, and you’re not arguing to me that Humana Health

Plans, Inc. signed on behalf of HIC.

[HIC COUNSEL]: Correct.

THE COURT: Okay. What you’re telling me is that *** the

court should view HIC’s subsequent performance as indicating that

it agreed to be bound.

[HIC COUNSEL]: Correct.”

Subsequently, HIC reiterated its position that subsequent performance established that HIC was

made a party to the Michael Reese contract:

“THE COURT: How could [HHP] bind HIC?

[COUNSEL]: Right, but *** it’s undisputed that subsequent

course of conduct shows that it did operate under that agreement.

And again, the 2005 and 2008 amendments make this very clear,

because they explicitly name HIC, and Palos obviously signed

those, and that was the only time period in dispute here.”

¶ 79 Palos’s counsel responded by referring to extrinsic evidence from the time the 1991

amendment was negotiated, including Manchester’s notes. The court expressed doubt that this

contradicted its finding that “HIC is the entity referred to in the [1991] amendment” or evidence

that “HIC acted as it if was bound by the amendment.” The court indicated its view that the

“subsequent amendments” that specifically mentioned HIC “ratified” the 1991 amendment.

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¶ 80 The trial court then asked counsel whether there is evidence “that HIC was sending patients

and receiving payments pursuant to the old Michael Reese agreement that was amended.” HIC

referred to Poynter’s trial testimony that between 2000 and 2002, HIC paid over 3000 claims to

Palos, totaling between $4 million and $5 million. In response, Palos counsel argued that Poynter’s

testimony did not establish that HIC’s payments were made pursuant to the Michael Reese

contract.

¶ 81 Palos further argued that there was no extrinsic evidence that “Humana Health Care Plans

really meant HIC.” Nonetheless, the court said it was “undisputed that HIC is a Humana Health

Care Plans’ preferred provider organization.”

¶ 82 With respect to the 2005 and 2008 amendments, Palos’s counsel argued extrinsic evidence

showed that there was no “meeting of the minds” of an intent to bind HIC. Palos cited testimony

from Demetrius Gordon, a Humana employee, that the preambles to the amendments that

referenced HIC were drafted by Humana’s corporate lawyers.

¶ 83 The court was unpersuaded, remarking that the evidence showed that “HIC was the only

entity in Illinois that could have provided these services period.” In concluding, the court said:

“Look, as a matter of law, I may be wrong about [Palos’s] argument

that the amendments coupled with the subsequent conduct don’t

create a direct contract within the meaning of the ChoiceCare

agreement. I don’t think I’m wrong, but maybe I am. The appellate

court will have to deal with that. I’m not going to change my ruling

on that.

The evidence which I had at the time of the summary judgment

ruling *** was that HIC *** was the only Humana Health Care

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Plans preferred provider organization in Illinois to which this [1991]

amendment could have referred, that HIC performed and the

hospital accepted its performance during the relevant period of time

*** and that subsequent amendments executed by the parties

referred specifically to HIC. That evidence, which is uncontradicted,

in my mind establishes that HIC was the entity referred to in this

amendment and that as a matter of law that relationship was a direct

contract within the meaning of the ChoiceCare agreement.”

¶ 84 In denying the motion to reconsider, the trial court noted that it was not considering

evidence or arguments that had not been presented prior to its original ruling on the cross-motions

for summary judgment. The court criticized Palos for citing extrinsic evidence in its motion to

reconsider that was not referenced in its briefing on the cross-motions for summary judgment.

¶ 85 ANALYSIS

¶ 86 On appeal, Palos primarily contends that we should reverse and find that Palos, not HIC,

was entitled to summary judgment. Palos avers that it established that HIC never became a party

to the Michael Rese contract. Even if the 1991 amendment was referring to HIC, Palos maintains

that amendment “unambiguously did not add HIC as a party” to the Michael Reese contract

because (1) it was not executed by HIC and (2) it did not contain contract formation language.

Palos asserts there was no other “direct contract” with HIC, so that Palos was entitled to the higher

reimbursement rates under the ChoiceCare contract.

¶ 87 In the alternative to summary judgment in its favor, Palos argues we should reverse because

the record at least presents genuine issues of fact that precluded granting HIC summary judgment,

concerning (1) the identity of the entity referred to in the 1991 amendment as “Humana Health

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Care Plans Preferred Provider Organization” and (2) whether the parties’ subsequent performance

added HIC as a party to the Michael Reese contract.

¶ 88 HIC responds that summary judgment was properly entered in its favor, as the

uncontroverted evidence (including the parties’ course of conduct after the 1991 amendment)

showed that HIC became party to the Michael Reese contract. HIC maintains that the trial court

correctly found it was a party to the Michael Reese contract, a “direct contract” that controlled the

applicable reimbursement rates that HIC owed to Palos.

¶ 89 For the following reasons, we find there were genuine issues of material fact as to the

meaning of the 1991 Amendment, as well as when the parties’ subsequent conduct reflected an

understanding that HIC was bound to the Michael Reese contract. We do find that the language of

the 2005 and 2008 amendments established that HIC was bound by the time of the amendments’

execution. Yet, fact questions remain as to whether HIC was previously bound to the Michael

Reese contract. Thus, we reverse the entry of summary judgment for HIC and remand for further

proceedings consistent with this opinion.

¶ 90 Standard of Review

¶ 91 Summary judgment is appropriate “if the pleadings, depositions, and admissions on file,

together with the affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.” 735 ILCS 5/2-1005(c) (West

2022). “Our supreme court has explained that a genuine issue of material fact exists where the

material facts are disputed or, if undisputed, where reasonable persons could draw different

inferences from the undisputed facts.” Council for Jewish Elderly v. Kurtz, 2024 IL App (1st)

230102, ¶ 36 (citing Monson v. City of Danville, 2018 IL 122486, ¶ 12).

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¶ 92 When parties file cross-motions for summary judgment, “they agree that only a question

of law is involved and invite the court to decide the issues based on the record.” Morningside North

Apartments I, LLC v. 1000 N. LaSalle, LLC, 2017 IL App (1st) 162274, ¶ 11. “However, the filing

of cross-motions for summary judgment does not establish that there is no genuine issue of material

fact, or obligate a court to render summary judgment.” Id.

¶ 93 We are mindful that summary judgment is a “drastic remedy.” Council for Jewish Elderly,

2024 IL App (1st) 230102, ¶ 35. “A court must therefore be cautious in awarding summary

judgment ‘in order to avoid preempting a litigant’s right to a trial in which the litigant may fully

present the factual basis of his or her case.’ ” Id. (quoting Schuster v. Occidental Fire & Casualty

Co. of North America, 2015 IL App (1st) 140718, ¶ 16). “[I]f the record reveals a dispute as to any

material issue of fact, summary judgment must be denied, regardless of the lower court’s belief

that the movant would or should prevail at trial.” (Internal quotation marks omitted.) Id. ¶ 36. We

review a circuit court’s decision to grant a motion for summary judgment de novo. Id. ¶ 33.

¶ 94 Applicable Contract Interpretation Principles

¶ 95 The parties agree that their dispute largely stems from the interpretation of the 1991

amendment to the Michael Reese contract, which referred “to members enrolled in Humana Health

Care Plans Preferred Provider Organization” without defining that entity. Thus, we review the

principles of contract interpretation.

¶ 96 “In construing a contract, a court’s primary objective is to give effect to the intention of

the parties. [Citation.] We look first to the language of the contract to determine the parties’ intent.”

Morningside North Apartments I, 2017 IL App (1st) 162274, ¶ 15. “If the language of the contract

is facially unambiguous, we interpreted both its meaning and the intent of the parties as a matter

of law *** without resorting to extrinsic evidence. [Citation.] However, if the language of the

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contract is reasonably susceptible to more than one meaning, it is ambiguous.” Id. Whether

contract language is ambiguous is a question of law. Id.

¶ 97 “If the terms of an alleged contract are ambiguous or capable of more than one

interpretation *** parol evidence is admissible to ascertain the parties’ intent.” Quake

Construction, Inc. v. American Airlines, Inc., 141 Ill. 2d 281, 288 (1990). “ ‘[T]he intended

meaning of ambiguous contract language may be derived from the circumstances surrounding the

formation of a contract or from the conduct of the parties subsequent to its formation.’ ” Shapich

v. CIBC Bank USA, 2018 IL App (1st) 172601, ¶ 22 (quoting Szafranski v. Dunston, 2015 IL App

(1st) 122975-B, ¶ 102).

¶ 98 The Court Could Consider Extrinsic Evidence to Address an Ambiguity

¶ 99 At this point, it is appropriate to address two threshold claims of error by Palos. First, Palos

maintains that “because the 1991 Amendment unambiguously did not add HIC as a party,” the

trial court could not consider extrinsic evidence. Palos additionally suggests that after the trial

court determined there was a contractual ambiguity, it was barred from entering summary

judgment because any ambiguity must be resolved by a jury. We disagree with Palos on both

grounds.

¶ 100 First, we conclude there was an ambiguity in the 1991 amendment. In it, Palos “agrees to

provide medical services as defined in [the Michael Reese contract] to members enrolled in

Humana Health Care Plans Preferred Provider Organization, (‘PPO’).” The term “Humana Health

Care Plans Preferred Provider Organization” was not defined or explained in the amendment. For

example, nothing in the text of the amendment indicated whether this was the legal name of a

Humana-affiliated entity, a trade name referring to an already-existing entity, or perhaps a

reference to an entity that was merely contemplated but not yet formally in existence. Certainly,

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we think this phrase was “reasonably susceptible to more than one meaning.” Morningside North

Apartments I, 2017 IL App (1st) 162274, ¶ 15. Moreover, the 1991 amendment was executed by

“Humana Health Plans, Inc.,” but did not have any language explaining the relationship between

that entity and “Humana Health Care Plans Preferred Provider Organization.” Thus, we find the

1991 amendment was ambiguous.

¶ 101 This brings us to Palos’s suggestion that, upon finding a contractual ambiguity in the 1991

amendment, the court was precluded from granting summary judgment. Our case law says

otherwise. This court has explained: “[O]rdinarily, where contract language is ambiguous, and

therefore must be decided on the basis of extrinsic evidence, summary judgment is inappropriate.”

William Blair & Co., L.L.C. v. FI Liquidation Corp., 358 Ill. App. 3d 324, 342 (2005). However,

“several cases have distinguished this general rule and held that if the extrinsic evidence available

to construe ambiguous language is not in dispute, a court may, nevertheless, properly decide the

issue as a question of law, as no question of fact is raised.” Id. That is, “even if a contract is

ambiguous on its face, summary judgment may nevertheless be appropriate if, predicated on the

extrinsic submissions of the parties, no material issue of fact remains in dispute.” Id.; see Richard

W. McCarthy Trust v. Illinois Casualty Co., 408 Ill. App. 3d 526, 535-36 (2011) (an “exception to

the general rule applies and summary judgment may be granted [if] the extrinsic evidence

submitted by the parties leaves no genuine issue of material fact in dispute”).

¶ 102 In short, summary judgment may be appropriate, despite a contractual ambiguity, “if the

parties’ intent can be determined solely from facts not in dispute,” including extrinsic evidence.

Gomez v. Bovis Lend Lease, Inc., 2013 IL App (1st) 130568, ¶ 24. Thus, the mere existence of a

contractual ambiguity did not preclude the trial court from entering summary judgment, but it

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could do so only if the extrinsic evidence established that there was no genuine issue of material

fact.

¶ 103 Here, the entry of summary judgment in HIC’s favor (and the denial of Palos’s motion to

reconsider) depended largely on the trial court’s determination that extrinsic evidence established

that HIC and Palos had a direct contract, after execution of the 1991 amendment. Notably, the

court’s remarks in granting summary judgment indicated it found no genuine factual dispute that

HIC was being referenced when the 1991 amendment referred to the “Humana Health Care Plans

Preferred Provider Organization.” Upon Palos’s motion to reconsider, the trial court apparently

agreed with HIC’s secondary argument that even if the 1991 amendment did not bind HIC at that

time, the parties’ subsequent conduct demonstrated that HIC became party to the Michael Reese

¶ 104 We disagree with the trial court. Rather, we think the record presented genuine issues of

fact as to both (1) the intended meaning of the 1991 amendment and (2) whether HIC became party

to the Michael Reese contract through the parties’ conduct before the subsequent 2005 and 2008

amendments explicitly referencing HIC. Accordingly, summary judgment (for either party) was

inappropriate.

¶ 105 There Was a Genuine Issue of Material Fact Regarding the Meaning of the 1991

Amendment

¶ 106 First, we think it is apparent that the evidence in the record presents a genuine issue of

material fact as to the intended meaning of the 1991 amendment to the Michael Reese contract. As

discussed, the amendment included an ambiguous reference to “Humana Health Care Plans

Preferred Provider Organization.” In granting summary judgment, the trial court found that this

phrase could only have been a reference to HIC. We disagree.

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¶ 107 We acknowledge that HIC witnesses, namely Maxwell, submitted sworn testimony that

HIC was the only Humana preferred provider organization at the time. Thus, Maxwell believed

that the 1991 amendment must have been referring to HIC. Notably, however, Maxwell did not

claim to have personal knowledge of the origin of the 1991 amendment.

¶ 108 Significantly, Palos witness Manchester testified to his personal involvement concerning

the 1991 amendment and gave a very different explanation of its purpose and meaning. He

testified, in essence, that the amendment was intended to provide coverage for a limited group of

City of Chicago employees who desired a PPO option, rather than an HMO. In his words, the

intent of the amendment was to “piggy back this very specific group into the [Michael Reese]

contract,” which was otherwise an HMO contract. Manchester denied any discussion that

“Humana Health Care Plans Preferred Provider Organization” was meant as a trade name for HIC.

He also denied any discussion that the amendment “would allow in any other PPOs.”

¶ 109 Manchester’s recollection of the July 1991 amendment’s limited purpose is consistent with

his notes from a March 1991 meeting, in which Manchester recorded that HHP—which had

recently acquired Michael Reese—told Palos its plan to develop a PPO with “hopes to enroll

government employees and their dependents.” Palos witness Stefo similarly testified at trial to his

understanding that the 1991 amendment was intended merely to allow “a very narrow county and

city employee group to access *** the Michael Reese Health Plan HMO rates under their PPO.”

¶ 110 No other witness with personal knowledge of the negotiation of the 1991 amendment

testified, let alone contradicted Manchester’s account. Based on his testimony, we certainly think

the record presented a genuine issue of fact as to the intent behind the 1991 amendment’s reference

to “Humana Health Care Plans Preferred Provider Organization.”

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¶ 111 The Parties’ Subsequent Conduct Also Presents Issues of Fact That Preclude

Summary Judgment in Favor of Either Party

¶ 112 Our analysis cannot end there, however. Notably, Palos argues that it is entitled to summary

judgment—even assuming arguendo that HIC was the “Humana Health Care Plans Preferred

Provider Organization” entity referred to in the 1991 amendment—because the amendment was

facially insufficient to bind HIC. That is, even assuming the 1991 amendment referred to HIC,

Palos asserts that it could not bind HIC to the Michael Reese contract. Palos points out that the

amendment was signed by “Humana Health Plans, Inc.” (HHP), not by HIC. Palos also argues the

amendment “contained no contract formation language,” that is, “elements of contract formation

(offer, acceptance, and consideration) evidencing a meeting of the minds.” Palos cites the

proposition that a valid contract modification “must satisfy all the criteria essential for a valid

contract: offer, acceptance, and consideration.” International Business Lists, Inc. v. American

Telephone & Telegraph Co.,147 F.3d 636, 641 (7th Cir. 1998).

¶ 113 We recognize (as did the trial court) that the 1991 amendment was executed by HHP, not

HIC. Indeed, at the motion to reconsider hearing, HIC’s counsel essentially admitted that HHP

could not unilaterally bind HIC to the Michael Reese contract. However, HIC took the position

that the parties’ subsequent conduct left no doubt that the parties understood and ratified that HIC

was a party to the Michael Reese contract. In denying Palos’s motion to reconsider, the trial court

indicated its agreement that the parties’ subsequent performance warranted summary judgment for

HIC.

¶ 114 We find that, although subsequent performance is relevant evidence, the record in this case

did not mandate summary judgment for either party in this case. We do find that the 2005 and

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2008 amendments were unambiguous and bound HIC. Nonetheless, fact questions remain as to

whether HIC was previously bound to the Michael Reese contract.

¶ 115 We agree with the general proposition that subsequent conduct may indicate an intent to

be bound to a prior agreement. It is “well settled that a party may, by acts and conduct, indicate

assent to the terms of a written contract and become bound by its provisions, even though the party

has not signed it.” Arbogast v. Chicago Cubs Baseball Club, LLC, 2021 IL App (1st) 210526, ¶ 21

(citing Landmark Properties, Inc. v. Architects International-Chicago, 172 Ill. App. 3d 379, 383

(1988)); see 23-25 Building Partnership v. Testa Produce, Inc., 381 Ill. App. 3d 751, 756 (2008)

(“If a document is signed by the party being charged, the other party’s signature is not necessary

if the document is delivered to that party and it indicates acceptance through performance.” (citing

Meyer v. Marilyn Miglin, Inc., 273 Ill. App. 3d 882, 891 (1995)). Indeed, the Seventh Circuit

decision cited by Palos recognizes that “[a] contract is validly modified if the party which did not

propose the changes is shown to acquiesce in the modification through a course of conduct

consistent with acceptance.” (Emphasis added). International Business Lists, Inc.,147 F.3d at 641.

¶ 116 These authorities indicate that the court was free to consider extrinsic evidence of the

parties’ subsequent conduct as indicative of whether HIC was made party to the Michael Reese

agreement, even if HIC was not a signatory to the 1991 amendment. In denying the motion to

reconsider, the trial court apparently found this evidence showed no genuine issue of fact as to the

parties’ understanding that HIC had become a party to the Michael Reese contract, from the time

of the 1991 amendment forward.

¶ 117 We reach a different conclusion. The evidence of subsequent performance was not so

convincing as to establish the absence of any genuine issue of material fact. In the trial court, HIC

essentially argued the evidence showed that since 1991, HIC paid millions of dollars to Palos to

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reimburse it for PPO claims, without any complaint from Palos until the 2004 letter. Close scrutiny

of the evidence, however, shows that it does not foreclose any issue of material fact as to whether

HIC became bound before it was explicitly mentioned in the 2005 and 2008 amendments.

¶ 118 First, the evidence of HIC’s prior payments did not establish that, since the 1991

amendment, Palos knowingly accepted reimbursements for PPO claims at the rates under the

Michael Reese contract.

¶ 119 HIC heavily relied on evidence of payments made to Palos from 2000 forward, including

Poynter’s testimony that from 2000 to 2002, HIC paid claims totaling $4 million to $5 million. We

think it is significant that HIC does not offer specific evidence as to payments made under the

Michael Reese contract for the previous nine years since the 1991 amendment, i.e. from 1991 to

1999. This is a significant gap in the overall evidence of the parties’ course of conduct since that

amendment was executed. Certainly, a reasonable juror might find the absence of such evidence

casts doubt on HIC’s assertion that, since 1991, Palos consistently acted as if the Michael Reese

contract governed.

¶ 120 Moreover, even Poynter’s testimony about the payments made from HIC from Palos was

not dispositive; it arguably raised additional questions of fact. Poynter was equivocal when the

court asked her to specify the basis for her understanding that the Michael Reese contract took

precedence over the ChoiceCare contract. When the court asked Poynter to specify what she relied

on for this belief, she answered: “Honestly, years of experience with Humana. That’s just

something I know that the Humana direct deal always takes precedence over the ChoiceCare lead

contract.” She admitted she was not aware of a particular document that supported this

understanding.

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¶ 121 Furthermore, although Poynter testified to her understanding that HIC was paying Palos

pursuant to the Michael Reese contract, she did not state that this was ever communicated to Palos.

Similarly, her affidavit did not state that HIC explicitly referenced the Michael Reese contract

when it sent Palos documentation of its claim reimbursements. At most, she indicated that the

reimbursement rates could be discerned from that documentation, suggesting that Palos could have

figured out that it was being paid at the Michael Reese contract rates. Yet, that is distinct from

saying that Palos actually knew and understood that it was being paid pursuant to the Michael

¶ 122 On this point, Palos elicited evidence indicating that it did not have reason to know which

contract HIC was operating under when Palos received reimbursements. Phyllis Marazzo, who

served as Palos’s director of patient financial services, testified at the 2018 trial. She stated that

when Palos contacted insurers to verify insurance coverage benefits information for patients, the

insurer did not tell Palos which specific contract the insurer was paying under.

¶ 123 Further, the samples of reimbursement documentation in the record are consistent with

Palos’s assertion that “[e]ven upon receiving reimbursement, Palos could not accurately determine

the patient’s specific managed-care plan.” The record indicates that Palos received documentation

that was labeled as coming from the “Humana Claims Office” but did not specify HIC as the

Humana entity at issue. Nor did such documentation refer explicitly to the Michael Reese contract.

¶ 124 Further, Stefo (the author of Palos’s 2004 letter) testified that from 2002 to 2004, the

applicable reimbursement rates under the Michael Reese contract and the ChoiceCare contract

were identical. This provides a plausible explanation why it was not until 2004 (two years after

the ChoiceCare contract) that Palos first realized that HIC was taking advantage of the lower

Michael Reese reimbursement rates, instead of the ChoiceCare contract rates.

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¶ 125 In our view, this evidence certainly raised fact questions as to whether the parties’ conduct

was sufficient to find that HIC was bound to the Michael Reese contract through the 1991

amendment—at least before any subsequent amendments explicitly referenced HIC.

¶ 126 The Plain Language of the Amendments Establishes That HIC Was Made a Party to the

Michael Reese Contract by 2005 but Does Not Resolve if HIC Was Already a Party

¶ 127 This brings us to the impact of subsequent amendments to the Michael Reese contract.

Significantly, it is undisputed that amendments to the Michael Reese contract in 2005 and 2008

explicitly named HIC as one of the Humana entities thereto. The amendments recited that they

were agreed to by Palos and a number of Humana entities, including “HUMANA Insurance

Company.” Notably, both of these amendments were executed during the contested period (2004

to 2010) for which Palos alleges it was underpaid. Thus, they cannot resolve whether HIC was

bound for the entire disputed period. In turn, they cannot establish that HIC was entitled to

summary judgment. However, we find they establish that HIC became a party by the time of the

execution of the 2005 amendment.

¶ 128 Palos argues that because the 2005 and 2008 amendments’ only explicit references to HIC

occur within the amendments’ recitals, such references are nonbinding. Palos cites the principle

that a preliminary recital is not binding until it is referred to in the “operative portion of the

instrument.” Illinois Housing Development Authority v. M-Z Construction Corp., 110 Ill. App. 3d

129, 144-45 (1982). We find this argument unavailing since (as HIC points out) the recitals at issue

listed the entities subsequently referred to under the collective term “HUMANA,” which appeared

in the operative provisions of the amendments. That is, the recitals were incorporated into the rest

of the amendments whenever “HUMANA” was mentioned.

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¶ 129 Palos also refers to extrinsic evidence that the recitals were boilerplate language inserted

by Humana. It notes the 2018 trial testimony of Gordon, Humana’s former contract executive from

2006 to 2011, that he received templates for contractual amendments “from corporate” in

Louisville, Kentucky. Palos thus suggests the “prefatory” recital language referring to HIC is

insignificant.

¶ 130 We must disagree, because the recitals are unambiguous in referring to “HUMANA

Insurance Company” as one of the several bound entities that are collectively defined as

“HUMANA.” As there is no ambiguity in the recitals, extrinsic evidence cannot be relied upon by

Palos to undermine or alter their terms.

¶ 131 Moreover, it is undisputed that Palos executives had full opportunity to review the

amendments, including the recitals at issue. Thus, Palos cannot avoid the import of their plain

language. “One is under a duty to learn, or know, the contents of a written contract before he signs

it, and is under a duty to determine the obligations which he undertakes by the execution of a

written agreement.” Leon v. Max E. Miller & Son, Inc., 23 Ill. App. 3d 694, 699 (1974). The 2005

and 2008 amendments thus demonstrate that, by the time of their execution, Palos recognized that

HIC was party to the Michael Reese contract.

¶ 132 In turn, we conclude that the amendments establish that, at least by the execution of the

2005 amendment, HIC was party to the Michael Reese contract. That is, at least as of the 2005

amendment, the Michael Reese contract was a direct contract with Palos of the sort contemplated

by paragraph IV.E of the Payor Agreement and section 13.6 of the ChoiceCare contract. Under

those provisions, HIC was entitled to take advantage of the lower reimbursement rates in the direct

agreement, the Michael Reese contract.

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¶ 133 Importantly, however—since the contested period at issue began in 2004—this conclusion

does not warrant summary judgment in HIC’s favor. This is because fact questions remain as to

whether the parties earlier indicated their understanding that HIC was a party to the Michael Reese

contract, either through the 1991 amendment or subsequent conduct.

¶ 134 Thus, we hold that (1) the evidence established that HIC was a party to the Michael Reese

contract as of the execution of the 2005 amendment and thereafter but (2) triable questions of fact

remain as to whether HIC previously became a party to the Michael Reese contract. Because

genuine issues of fact remain, summary judgment was improper.

¶ 135 CONCLUSION

¶ 136 For the foregoing reasons, we reverse the circuit court orders granting summary judgment

to HIC and denying Palos’ motion to reconsider. We remand for the trial court to conduct further

proceedings consistent with the conclusions reached in this opinion.

¶ 137 Reversed and remanded.

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Palos Community Hospital v. Humana Insurance Co., 2025 IL App (1st) 231917

Decision Under Review: Appeal from the Circuit Court of Cook County, No. 2022-L- 2971; the Hon. Jerry A. Esrig, Judge, presiding.

Attorneys Everett J. Cygal, Catherine M. Masters, Rachel A. Remke, and for Jasmine K. Dela Luna, of ArentFox Schiff LLP, of Chicago, for Appellant: appellant.

Attorneys Scott C. Solberg, James W. Joseph, and Stuart F. Primack, of for Eimer Stahl LLP, of Chicago, for appellee. Appellee:

-36-